Alphabet GOOGL shares have lost 19.2% year to date, underperforming the broader Zacks Computer & Technology sector’s decline of 16.4%. The decline can be attributed to challenging macroeconomic conditions post U.S. President Donald Trump’s decision to levy tariffs on trade partners, including China, Mexico, and Canada.

However, GOOGL’s initiatives to infuse AI into its products are a major growth driver. Alphabet made a series of high-impact announcements at the Cloud Next 2025 conference in Las Vegas on Wednesday.

Alphabet unveiled Ironwood, its seventh-generation Tensor Processing Unit (TPU), expected to be available later this year. Ironwood promises 3,600 times better performance compared with Alphabet’s first publicly available TPU and is 29 times more energy efficient.

Google Cloud unveiled its Cloud Wide Area Network (Cloud WAN), giving enterprises access to its private global fiber network. Launching later this month, Cloud WAN delivers more than 40% faster performance while cutting ownership costs by a similar margin.

Alphabet showcased Willow, its new quantum chip, which overcomes a key challenge in error correction. Willow reduces errors exponentially as more qubits are added, paving the way for scalable quantum computing.

On the AI model front, Alphabet launched Gemini 2.5, its most advanced reasoning model, alongside Gemini 2.5 Flash, a low-latency, cost-efficient version tailored for developers.

Alphabet’s diverse portfolio spanning Google Cloud, Search and YouTube is expected to help the stock ride over the current tumultuous phase. GOOGL’s plan to buy Wiz for a whopping $32 billion in a deal that will enhance Google Cloud’s security offerings. Wiz has a stellar clientele with its cloud security platform currently used by Amazon AMZN, Microsoft and Oracle ORCL.

Alphabet dominates the digital advertising and search business that drives advertising revenues. In fourth-quarter 2024, Google Search revenues increased 13% year over year to $54 billion, led by strength in financial services and retail, while YouTube ads increased 14% year over year to $10.5 billion. Google Cloud revenues surged 30% year over year to $12 billion, driven by core cloud products, AI infrastructure, and generative AI tools like Vertex AI and Gemini. The company is facing stiff competition from Microsoft and Amazon in the cloud domain.

Alphabet Benefits From Expanding Clientele

Alphabet continues to deepen its enterprise partnerships, fuelling growth in AI and cloud. The company recently deployed NVIDIA’s NVDA H200-based platforms to customers and was the first to announce a customer running on the highly anticipated Blackwell platform, reinforcing its strong ties with NVIDIA. 

GOOGL also expanded its collaboration with Oracle, announcing an industry-first partner program and the upcoming availability of Oracle Base Database Service on Oracle Database running on Google Cloud. The service now supports Oracle Exadata X11M and offers Oracle Interconnect for U.S. Government Cloud customers. To meet rising customer demand, Oracle and Alphabet plan to expand its availability to 11 new regions over the next 12 months.

GOOGL’s Q1 to Suffer From Unfavourable Forex

Alphabet expects first-quarter 2025 revenues to suffer from unfavourable forex and one less day of revenues compared with the year-ago quarter.

The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $75.63 billion, suggesting a 11.87% increase from the prior-year quarter’s actual.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The consensus mark for first-quarter 2025 earnings is pegged at $2.02 per share, unchanged over the past 30 days. The consensus estimate indicates a year-over-year increase of 6.88%.

Zacks Rank

Alphabet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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